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Friday, April 11, 2008

Chrysler offer lifetime warranty

In what was probably a very statistically calculated marketing move, the Chrysler Group has one-upped most of the auto industry by announcing that it will be offering lifetime repairs for the powertrain sections of its cars and trucks sold to U.S. customers.

The move, made public yesterday, replaces the industry-standard three-year, 36,000-mile powertrain warranty and should give Chrysler, Jeep and Dodge cars and trucks a much-needed public relations boost. Chrysler Group needs to fan this for as long as possible and gain as much traction with customers and dealers as possible, as this is one of those paradigm-shifting moves that could change the auto industry's warranty practices soon.

Starting with yesterday's Chrysler vehicle sales, the new lifetime warranty covers most Chrysler vehicles (and the sub-brands, of course) and "the cost of all parts and labor needed to repair covered powertrain components - engine, transmission and drive system." Will customers start choosing Chrysler vehicles knowing that they'll be protected from failures in these components for the lifetime of their ownership?

Did Cerberus Capital Management (in the process of taking ownership of the Chrysler Group) have a hand in this under the expectation that a warranty program like this would spike sales? Who knows. The bigger question is whether this move will prompt other automakers, like Ford and GM, to offer a similar warranty, and if so, was Chrysler's move a blindsided tackle instead of some kind of desperate expectation?